Law Times

Law Times • augusT 4, 2014 Page 11 www.lawtimesnews.com Law on business method patents still unclear By Julius melniTzer For Law Times espite six decisions and two practice notices from the Canadian In- tellectual Property Of- fice following the Fed- eral Court of Appeal's decision on Amazon.com Inc.'s one-click patent in 2011, the fate of business method and software patents in this country remains unclear. "Although four of the decisions ruled that the applications did cover patentable subject matter, the whole area is definitely still in f lux," says Heather Michel, an as- sociate at BPR Litigation Lawyers in Richmond Hill, Ont. So a patent application by the company that manages retire- ment funds for doctors certainly bears watching. "CIPO's examiners continue to harbour a bias against [business- method patents]," says Neil Hen- derson of Borden Ladner Gervais LLP. He represents MD Physician Services Inc., a wealth-manage- ment company owned by the Ca- nadian Medical Association with more than $35 billion in assets. MD Physician Services re- cently applied for Canadian and U.S. patents for its proprietary fund management process engi- neered exclusively for Canadian physicians. "The process contains quali- tative and quantitative elements that combine a business method with deep predictive analysis," says Mike Gassewitz, MD Physi- cian Services' executive vice presi- dent of member solutions. But it's unclear whether the company will succeed in obtain- ing patents for its process. Indeed, statistics from the intellectual property office suggest a disincli- nation to grant "computer-imple- mented patents." "The ratio of allowed comput- er-implemented patents are low, even taking into account applica- tions under that heading that are not controversial," says Ian Mc- Millan of Bereskin & Parr LLP's Mississauga, Ont., office. The difficulty is that the law in both Canada and the United States remains in f lux. In Canada, the Federal Court of Appeal's 2011 ruling in the Amazon one- click case is the seminal decision. In that case, Amazon ob- tained a U.S. patent for the one- click feature in 1998. But in 2004, the Canadian Intellectual Prop- erty Office refused to issue a Ca- nadian patent for the process. On appeal, the Patent Appeal Board shocked the intellectual prop- erty community with a definitive statement against the patentabil- ity of business methods in Can- ada. The board also categorically stated that previous decisions al- lowing business-method patents were wrong. In November 2011, however, the Federal Court of Appeal re- jected the board's analysis and ordered the intellectual property office to re-examine whether the one-click patent was "patentable subject matter." While the court was clear that business methods could be pat- ented, the decision left consider- able uncertainty as to how the intellectual property office and the courts would treat specific ap- plications from then on. The intellectual property of- fice granted the one-click patent shortly thereafter, but the deci- sion received little fanfare. Since then, the patentability of business methods has remained largely un- der the radar, partly because the Amazon case hasn't sparked the wave of applications some intel- lectual property lawyers thought it would. "The applications of which I'm aware were in the pipeline before the Amazon decision," says Henderson. "But then, for whatever rea- son, people aren't inclined to publicize their applications, so there may be more around than is generally known." The difficulty with obtaining patents for business methods is that many examiners regard them as abstract schemes or ideas, both of which have never been patent- able. What's clearly patentable are computer implementations of mathematical formulas that achieve practical results. "For example, there is no dis- pute about the patentability of an image compression system in which a mathematical algo- rithm compresses a picture on a cellphone so it can be transmit- ted," says McMillan. But Canadian patent exam- iners don't take the same view of applications directed at business methods or software. "With the computer included as part of the process, it's diffi- cult to treat a [business-method patent] or software as merely ab- stract," says McMillan. "So what the examiners do is strip out the computer elements as non-essential and say that all that is left is an abstract scheme or method." Applicants have been able to overcome examiners' resistance, however, with well-considered arguments that the computer elements are essential for the implementation of a business method or software application. "Sometimes, the people at the patent office give in and some- times they dig in their heels," says McMillan. For its part, MD Physician Ser- vices believes its process, which it has been using for more than 40 years, is unique and patentable. "The process is multifaceted and innovative and goes well be- yond the analysis and selection of a fund manager to helping us determine which combina- tion of investment philosophies, processes, and partnerships will likely deliver the best future risk-adjusted performance for our clients," says Craig Mad- dock, one of the five inventors of the process and vice president of investment management at MD Physician Services. LT FOCUS D IP bar vexed at trademark changes By Julius melniTzer For Law Times espite opposition from most — but not all — of the country's intellectual property bar, the federal government has intro- duced fundamental changes to trademark law. The amendments were in the Economic Action Plan 2014 Act, also known as Bill C-31, that implements the budget announced in February that became law in June. Most significantly, the changes remove previous use of a trade- mark, in Canada or elsewhere, as a requirement for registration. They align Canada with other jurisdictions, including the European Union, that base trademark rights on registration alone. Some 200 intellectual property law practitioners from every province formally objected to the amendments. "The changes undermine the foundation of our trademark law," said Dan Bereskin, founding partner of Bereskin & Parr LLP. "They abandon more than 140 years of trademark jurisprudence and may invite a constitutional challenge." Numerous trademark owners, including the proprietors of iconic brands like Tim Hortons and BlackBerry, various chambers of com- merce, and a host of trade associations, also objected formally. "The view of our members is that the elimination of use as a re- quirement for registration will increase the cost of doing business and create opportunities for trademark trolls," said Scott Smith, the Ottawa-based director of intellectual property and innovation poli- cy at the Canadian Chamber of Commerce. The upshot of the amendments is that without the necessity of show- ing prior use, anyone will be able to register a trademark whether or not they have a legitimate commercial application in mind for the mark. "Doing away with use means that as long as someone is prepared to pay the application fee of several hundred dollars, they can regis- ter a trademark," says Sheldon Burshtein of Blake Cassels & Graydon LLP's Toronto office. "And while it will be easier to get a registration, there will be way more registrations around which business will have to navigate in choosing company and brand names," adds Burshtein. Heather Michel of BPR Litigation Lawyers in Richmond Hill, Ont., sees a parallel in the experience wrought by Internet domain names about 15 years ago. "What you're going to get is bad-faith applications, similar to what happened with URLs," she says. D See Trademark, page 12

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